Esports betting will be the next Big Thing in the US online gambling sector. That’s what every large gathering of industry insiders has been saying for the past few months. Esports pioneer Grant Johnson is ready for that to happen, but says the newly regulated form of online gambling needs work before it reaches its potential.
Johnson is CEO of the Malta-based esports betting company Esports Entertainment Group (EEG). His company launched the online betting platform Vie.gg in April. The esports betting site is now part of the vast New Jersey ecosystem of online gambling.
In order for esports betting to flourish, Johnson tells Bonus.com that it needs more help from regulators, benefits from far different forms of marketing, and generally needs to be considered its own beast. It’s not US online casino and it’s not US online sports betting, he says.
What the Online Gambling Industry Thinks of Esports Betting
Ironically, Johnson’s pioneering work on the next Big Thing may soon benefit one of the Big Three operators in the US online casino space.
On Sept. 22 at the East Coast Gaming Congress and NexGen Gaming Forum (ECGC) held in Atlantic City, Entain CEO Jette Nygaard-Andersen made an announcement. She said her Isle of Man-situated company is about to launch an esports brand. Entain jointly runs the No. 1 US online casino brand, BetMGM, with Las Vegas-based MGM Resorts International.
In October 2021, Entain bought Seattle-headquartered esports betting platform Unikrn. Entain installed Justin Dellario, formerly a vice president of original content at streaming platform Twitch, as Entain’s managing director of esports.
Entain’s acquisition announcement reads:
Esports is now established as a mainstream sport, with over 450 million gamers aged 18-35. Entain believes that many of these have strong potential to become new customers in other areas of its business, recently noting that video gamers are more than four times more likely to participate in sports-betting and iGaming than others in the same demographic.
Esports Betting May Switch Categories
While the US online gambling industry is just discovering esports betting, Johnson’s lived it. He’s seen its ups and downs and is still around to tell the tale.
One of the reforms he advocates, Senate Bill 2986, is winding its way through the New Jersey Legislature.
Its description says:
Includes Esports as internet gaming and provides for additional internet gaming permits; permits additional Esports-only permits for sports wagering.
Right now, esports betting is lumped in with online sportsbooks.
However, even if the bill becomes law, Johnson thinks there’s more work to do to make US esports betting better.
Here, he talks about his experiences with Bonus.com. The publication’s questions are in bold and his answers are below.
What do you think of NJ’s proposed legislation making esports-only betting licenses possible?
I think it’s absolutely a step in the right direction, given esports wagering is still relatively nascent. It really needs to be dealt with differently than the mature sports betting licenses. One of the key issues, from an operator standpoint, will be cost associated with the license.
Most companies in the esport area are far smaller operators than the traditional sportsbook or casino brands.
Is separating esports better for you than its current sports categorization?
Absolutely, it’s a different product. It needs to be separated and also not associated with a skin.
Or if it is, they have to be radically less expensive. I can understand having “skins” for sportsbook and casino online operators. They were put in place to offer some protection to the land-based operators who have invested hundreds of millions, in many cases billions, of dollars in their respective states. The issue with esports is that there are no existing land-based casino operators with any products to engage the esports fan base.
My opinion is by lumping it under sportsbook, it created a barrier to entry to esports operators.
What’s your view of the argument in favor of making them separate?
In my opinion, there is no argument. They are just different, period.
I have yet to hear a compelling reason for esports to [be] bundled under the sport betting license. I believe the reason esports currently is viewed [the] same as sportsbook is due to the fact that the regulatory environment had not yet been able to catch up to the growth of the sector.
As the first company to ever go through the process in North America, it was a slow painful, expensive learning process for all the stakeholders, the regulators, the casino, and of course ourselves.
Do esports and sportsbook betting have a similar audience?
This is one of those questions where the answer is both “yes” and “no,” depending on the titles.
Esports, not unlike sports, is not a homogenous audience.
For example, it’s probably safe to say fans of rhythmic gymnastics or synchronized diving are not likely fans of football. But they are all sports fans.
The same is true of esports: where “traditional esports” fans of Dota2, CS:GO, LoL, among others have less cross-over to traditional sports.
However, there is a significant cross-over on the virtual sports titles like Madden, NBA2K, FiFa. These fans tend to also be fans of traditional sports, which certainly makes sense.
Many, if not most, sports fan households have a gaming console in their homes, which they no doubt enjoy using – probably daily.
Do esports and sportsbook betting have similar marketing strategies?
Traditional sportsbooks overwhelmingly use affiliates for marketing. Also, in sports marketing, you see frequent [ads] on TV or hear them on radio talking about betting in general “on your favorite team.”
Since esports fans don’t get their media fix from TV – and if they are listening to radio, [it’s] probably satellite or a service like Spotify – these methods are not very effective.
Marketing esports requires a different approach. In our experience, the fans react better when we engage the services of influencers. These streamers are generally specific to a title and not generalists. Fan bases in esports tend to be a bit tribal.
Also, esports fans tend to gravitate to brands that are more genuinely aligned with the games/leagues that they follow.
Sports fans are much less sensitive to the authenticity of a campaign than esports fans are likely to be. We have seen socially responsible campaigns being very successful in eports – less so [in] traditional sports.
Do the same marketing approaches reach esports audiences?
As just mentioned, we do not think so.
Esports fans don’t watch a lot of TV or listen to radio. And print media is absolutely wasted for marketing to esports fans, where all three of those have proven effective in traditional sportsbook marketing.
In our experience, whatever approach you take, it has to be authentic. (i.e. If you are trying to market betting to esports fans and you want them to come to your sportsbook site, then navigate to a subcategory where the esports content is, that won’t be effective.)
If you are marketing a betting site and the content on the landing page is esports and video gaming-centric you will have far more traction.
Is being in the same category as sports betting dooming esports to become a sportsbook with esports betting lines?
As of today, yes you could say that. I would add that esports as a viable stand-alone product in the regulated markets is several years away, maybe.
There are several reasons for this.
One major one is costs. We have all the costs of a sportsbook operator and maybe 5-10% of the events are approved for betting.
Also, the fan base is still relatively new to gambling.
As a result, the numbers are unattractive and fail to generate significant revenues.
That’s where we are today. Esports fans don’t respond to sportsbook marketing techniques. And generally, sports fans aren’t interested. So esports is stuck in limbo.
The entire esports and gaming ecosystem is still in the early stages. However, this is changing quickly. I’ve said it before but it’s worth repeating: 5-6 years ago, there were effectively zero intercollegiate esports programs at the university level. Today, there are 600 schools [approximately] and more every month. The rate of change is astounding.
Today, the sites making decent revenues are the grey market operators. The regulated operators are, to use a betting term, handicapped.
What else should Bonus.com readers know about your views on this?
One thing I can say is NJ is certainly making every effort to be out front on the growth of the esports wagering and betting sector.
We were the first ever to pass the regulatory approval process in North America, and that was in NJ.
Our player vs. player skill betting platform, BetGround, [is] also a first to be approved by a regulator, also in the state of NJ. The new esports innovation center in AC is another first of its kind in the USA.
So I can say with confidence that NJ is constantly in the vanguard when it comes to esports. So if it’s going to happen, it’s likely going to happen in NJ first.